Nebraska court ruling on Keystone XL pipeline not expected until 2015

WASHINGTON (Reuters) - The Nebraska Supreme Court will soon hear arguments in a dispute over the planned route for the Keystone XL pipeline but a court ruling on the controversial project is likely to be delayed until the new year, lawyers and activists say.

The court has scheduled oral arguments for Sept. 5 in Lincoln over the proposed path of the 1,200-mile (1,900-km) pipeline from Canada to Texas.

Although it will be a talking point in several Congressional races, Keystone's fate is likely to remain in limbo during the Nov. 5 U.S. mid-term elections.

"These things typically take three to six months," said Jane Kleeb, of the group Bold Nebraska, which has helped galvanize landowner opposition to the pipeline. "We have always thought the decision will come in January."

TransCanada Corp's $5.4 billion pipeline would connect Western Canada's tar sands region with Texas oil refineries but the project, now in a sixth year of debate, continues to face opposition.

The Nebraska ruling will address a dispute that has involved the state's politicians, ranchers and regulators. State lawmakers last year cleared the way for the pipeline but a group of landowners challenged the decision.

In February, a district court sided with landowners who want the siting decision left to the five-member Nebraska Public Service Commission. Governor Dave Heineman asked the Nebraska Supreme Court to overrule.

TransCanada declined to comment on the Nebraska case.

The U.S. State Department said in April that its review of the pipeline was on hold until the Nebraska case had concluded.

Ultimately, President Barack Obama will have the last word on the project, and the White House may conclude Keystone is not in the national interest if the project's 830,000 barrel-per-day capacity would unduly worsen climate change.

Republican leaders have rejected that thinking and promoted the pipeline as a jobs booster.

Keystone XL foes have encouraged Obama to block the pipeline and cement his legacy as an environmental president. They have contested the State Department's finding that the pipeline would have a negligible effect on climate.

The study fails to account for how the pipeline would spur future oil demand, according to a report published Monday by the journal Nature, authored by the Stockholm Environment Institute, an environmental think tank.

"It is clear that Keystone does not pass the president's climate test," an association of several environmental groups said in a statement.

The case is Thompson vs. Heineman, case number S-14-0158 in the Nebraska Supreme Court.